EXHIBIT 4.8
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and entered into as of
August 30, 2006 by and among Harbin Electric, Inc., a Nevada corporation (the
"Company"), Citadel Equity Fund Ltd. ("Citadel"); and YANG Tianfu, a resident of
the City of Harbin, Heilongjiang province, the People's Republic of China
("YANG") (the "Key Shareholder").
RECITALS
A. Citadel has agreed to purchase from the Company, and the Company has
agreed to sell to Citadel, an aggregate of 38,000 units (the "Units"), at a
purchase price of $1,000 per Unit, with each Unit consisting of $1,000 in
principal amount of the Company's Guaranteed Senior Secured Floating Rate Notes
due 2012 (the "Notes"), and a proportionate share of the six-year warrants to
purchase 2,192,308 shares of common stock of the Company, par value $.00001 per
share (the "Common Stock"), at an exercise price of $7.80 per share (the "First
Tranche Warrants") and a proportionate share of the six-year warrants to
purchase 525,830 shares of Common Stock at an exercise price of $10.84 per share
(the "Second Tranche Warrants", and together with the First Tranche Warrants,
the "Warrants"), on the terms and conditions set forth in that certain Unit
Purchase Agreement dated as of August 29, 2006 by and among the Company, the
Subsidiary Guarantor (as defined therein), and Citadel (the "Purchase
Agreement").
B. The Purchase Agreement provides that the execution and delivery of this
Agreement by the parties shall be a condition precedent to the consummation of
the transactions contemplated under the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. BOARD REPRESENTATION.
1.1 Citadel Nominees. Upon the Citadel Election (as defined below),
Citadel shall be entitled to appoint up to two (2) individuals (each a "Citadel
Nominee" and together, the "Citadel Nominees") to serve on the Company's Board
of Directors for so long as Citadel holds any Notes.
1.2 Citadel Election. If Citadel provides written notice to the Company
informing the Company of (i) its election (the "Citadel Election") to be
represented on the Board of Directors and (ii) the name(s) of the Citadel
Nominee(s), then, as soon as practicable after its receipt of such notice from
Citadel, but in no event later than five (5) business days after such receipt,
the Company shall:
(a) provide notice of the Citadel Election to the Company's Board of
Directors and the Key Shareholder, and
(b) take all necessary actions so as to permit the Citadel
Nominee(s) to be duly appointed or elected as members of the
Company's Board of Directors.
Subject to the conditions and limitations set forth herein, the
Citadel Election may be exercised by Citadel at any time in its sole discretion.
1.3 Size of the Board of Directors. The Company shall take all necessary
action, from time to time and at all times, so as to (i) maintain the total size
of the Board of Directors (including vacancies) to permit the Citadel Nominees
to be appointed to the Board of Directors and (ii) ensure that the total size of
the Board of Directors does not exceed ten (10) members at any time.
1.4 Voting Agreement. The Key Shareholder agrees to vote, or cause to be
voted, all shares of the Company's Common Stock (the "Common Stock") owned by
such Key Shareholder (of record or through a brokerage firm or other nominee
arrangement), or over which such Key Shareholder has voting control, from time
to time and at all times, in whatever manner as shall be necessary:
(a) to ensure that at each annual or special meeting of shareholders
at which an election of directors is held or pursuant to any written
consent of the shareholders, the Citadel Nominees are duly elected
to the Board of Directors;
(b) to ensure that the size of the Board of Directors is sufficient
to permit the appointment and/or election of the Citadel Nominees to
the Board of Directors; and
(c) to ensure that the total size of the Board of Directors does not
exceed ten (10) members at any time.
1.5 Vacancies. Any vacancies created by the resignation, removal or death
of a Citadel Nominee appointed or elected to the Board of Directors shall be
filled pursuant to the provisions of this Section 1.
2. Representations and Warranties of Key Shareholder. The Key Shareholder
represents and warrants that:
2.1 The Key Shareholder is the beneficial owner of (i) 9,750,000 shares of
Common Stock (of record or through a brokerage firm or other nominee
arrangement), which constitutes at least a majority of the outstanding voting
power of the Company's capital stock and (ii) 30,000 options to purchase shares
of Common Stock.
2.2 The Key Shareholder has full power and authority to make, enter into
and carry out the terms of this Agreement. This Agreement has been duly executed
and delivered by the Key Shareholder and constitutes the legal, valid and
binding obligations of the Key Shareholder, enforceable against the Key
Shareholder in accordance with its terms.
2.3 The execution and delivery of this Agreement by the Key Shareholder do
not, and the performance of this Agreement by Shareholder will not: (i) conflict
with or violate any law, rule regulation, order, decree or judgment applicable
to the Key Shareholder or by which the Key Shareholder or any of the properties
of the Key Shareholder is or may be bound or affected; or (ii) result in or
constitute (with or without notice or lapse of time) any breach of or default
under, or give to any other person (with or without notice or lapse of time) in
the creation of any encumbrance or restriction on any of the shares of Common
Stock pursuant to any contract to which the Key Shareholder is a party or by
which the Key Shareholder or any of the affiliates or properties of Shareholder
is or may be bound or affected. The execution and delivery of this Agreement by
the Key Shareholder do not, and the performance of this Agreement by the Key
Shareholder will not, require any consent or approval of any person.
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3. Miscellaneous.
3.1 Term. This Agreement shall be effective as of the date hereof and
shall continue in full force and effect until, and shall terminate upon, the
earlier of (i) the Company and the Key Shareholder's receipt of Citadel's
written notice to terminate the Agreement (the "Termination Notice"), or (ii)
the Company's repayment in full of the Notes; provided, however, that
notwithstanding the foregoing, upon (x) such time when Citadel no longer holds
any Notes, or (y) the termination of this Agreement, the Company shall have the
right to request the Citadel Nominee(s) to resign from the Company's Board of
Directors ("Resignation Request"), and Citadel agrees to cause the Citadel
Nominees to promptly comply with any such Resignation Request.
3.2 Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other party, upon delivery; (b) when sent by facsimile at
the number set forth in Exhibit A hereto, upon receipt of confirmation of
error-free transmission; (c) seven (7) business days after deposit in the mail
as air mail or certified mail, receipt requested, postage prepaid and addressed
to the other party as set forth in Exhibit A; or (d) three (3) business days
after deposit with an international overnight delivery service, postage prepaid,
addressed to the parties as set forth in Exhibit A with next business day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.
A party may change or supplement the addresses given above, or
designate additional addresses, for purposes of this Section 3.2 by giving the
other party written notice of the new address in the manner set forth above.
3.3 Entire Agreement. This Agreement and the Purchase Agreement, together
with all the exhibits hereto and thereto, constitute and contain the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
3.4 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance the internal laws of the New York without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of New York to the rights and
duties of the parties hereunder.
3.5 Severability. If any provision of this Agreement is found to be
invalid or unenforceable, then such provision shall be construed, to the extent
feasible, so as to render the provision enforceable and to provide for the
consummation of the transactions contemplated hereby on substantially the same
terms as originally set forth herein, and if no feasible interpretation would
save such provision, it shall be severed from the remainder of this Agreement,
which shall remain in full force and effect unless the severed provision is
essential to the rights or benefits intended by the parties. In such event, the
parties shall use best efforts to negotiate, in good faith, a substitute, valid
and enforceable provision or agreement which most nearly effects the parties'
intent in entering into this Agreement.
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3.6 Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of, and shall be binding upon, the successors and assigns of the
parties hereto; it being understood that Citadel shall be permitted to assign
its rights under this Agreement to any third party purchaser of the Notes.
3.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Counterparts transmitted by facsimile shall be
deemed to be originals.
3.8 Specific Performance. The parties hereto acknowledge that, in view of
the transactions contemplated by this Agreement, each party would not have an
adequate remedy at law for money damages in the event that this Agreement has
not been performed in accordance with its terms, and therefore agrees that the
non-breaching parties shall be entitled to specific enforcement of the terms
hereof in addition to any other remedy to which such non-breaching parties may
be entitled at law or in equity.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused their respective duly
authorized representatives to execute this Agreement as of the date and year
first above written.
THE COMPANY:
HARBIN ELECTRIC, INC.
By: /s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
Title: Chief Executive Officer
THE KEY SHAREHOLDER:
/s/ Xxxxxx Xxxx
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YANG Tianfu
CITADEL:
CITADEL EQUITY FUND LTD.
By: Citadel Limited Partnership, Portfolio Manager
By: Citadel Investment Group, L.L.C., its General Partner
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Name: Xxxxxxxxxxx X. Xxxxxx
Title: Authorized Signatory
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